April022012

The president of Argentina’s Central Bank (BCRA),
Mercedes Marcó del Pont, stressed the importance of the recently
approved bank’s charter reform and denied that printing currency leads
to the creation of an inflationary state “since inflation is rooted in
other causes”.
Marcó del Pont: tensions with prices must be looked on the supply side and the external sector”.

“The new charter will provide the government with more
tools to deepen the development model and to give priority to investment
credit” said Marcó del Pont in a Sunday interview with two
pro-government local newspapers Página 12 and Tiempo Argentino.

The banker added that “it is totally false to say that printing more
money generates inflation, price increases are generated by other
phenomena like supply and external sector’s behaviour”.

In that sense, the BCRA president explained that “the priority right
now is the investment credit, because it is one of the issues in which
Argentina is still with insufficient coverage. We look for credits of
longer-term investment plans at reasonable rates with the return of
these investment projects.”

“We discard that financing the public sector is inflationary because
according to that statement the increase in prices are caused by an
excess of demand, something we do not see in Argentina. In our country
the means of payment are adjusted to the growth of demand and tensions
with prices must be looked on the supply side and the external sector”.

Marcó del Pont remarked that criticism of the way the state is
funding itself “have a clear ideological condiment, it is that or either
the public sector has to make adjustments or go abroad to get credits
and/or loans”. She added that the debate is very similar to that
referred to “the use of BCRA reserves to pay for sovereign debt”.

Under the new charter of the bank the primary and main task of the
BCRA will not be only to preserve the value of the currency but must
also include inflation, jobs, economic development with social fairness,
financial stability and the need to coordinate with government
policies.

“We’re recovering the sovereign capacity to formulate and implement
economic policy”, said Marcó del Pont who anticipated some pictures will
be coming down from the bank’s hall of fame “beginning with Milton
Friedman.”

The banker explained that the criteria to determine the optimum level
of reserves will be determined in coming days and will involve several
existing and new elements. Under the new BCRA charter funds above the
‘optimum level’ can be used for other purposes such as development
financing.

“The formula will include issues referred to imports, short term
foreign debt payments, the evolution of bank deposits and accumulation
of foreign currency assets”, said Marcó del Pont who forecasted that in
the first quarter the sum will be below two billion dollars but for the
whole year the sum is estimated in 9 billion or more.